Can You Stop Monthly Contributions to a 529 Plan without Penalty?

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Mark Kantrowitz

By Mark Kantrowitz

September 17, 2020

There is no requirement that you continue making contributions to a 529 plan. You can stop making contributions to a 529 college savings plan at any time without having to pay a fee or other penalties. 

There are many reasons why a family might decide to stop contributing to a child’s 529 plan. 

  • The family has met their college savings goal and does not want to increase their college savings goal.
  • The family has moved to a different state and wants to direct new contributions to that state’s 529 plan. 
  • The 529 plan account balance has reached the aggregate limit, so no further contributions are allowed.
  • The student has won a full scholarship.
  • The child has decided to not go to college or to go to a less expensive college.
  • An older sibling has leftover money in their 529 plan.
  • Family income has decreased and the family needs the contributions to pay for living expenses.
  • A grandparent or other relative has made a lump sum contribution, eliminating the need for further monthly contributions. 

The monthly contributions in a prepaid tuition plan are designed to cover the cost of a year of tuition by the time the child enrolls in college. If you stop making contributions, the prepaid tuition plan will cover less than a full year of college tuition.

Similarly, if you stop making monthly contributions to a 529 plan, you may not reach your college savings goal.

If you stop making contributions to your 529 plan, nothing stops you from deciding to restart contributions later. You can also make lump sum contributions if you are able. 

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